Regeneration

Regen 26

Written evidence submitted by England’s Regional Development Agencies

Introduction

1. This submission is intended to inform the committee’s inquiry into regeneration. It represents the views of the Regional Development Agencies (RDAs) outside London, but not those of the London Development Agency (LDA), given London’s unique governance arrangements.

2. The Government has announced its decision to abolish RDAs, working to a timetable of closure by April 2012. RDAs are working with Government and local partners to achieve a smooth and orderly transition to new arrangements, including the formation of LEPs.

3. In this submission, we draw upon the eleven years experience of England’s RDAs in promoting sustainable economic development and regeneration, and highlight a number of issues which we believe should be considered by the Government as it moves forward with its new approach to regeneration.

4. The submission therefore focuses on the third of the questions set out by the Committee; namely: What lessons should be learnt from past and existing regeneration projects to apply to the Government’s new approach?

5. It sets out lessons RDAs have learnt over their lifetime from delivering many different and complex regeneration projects and gives some past and present examples to illustrate these.

Context and Background

6. Regional Development Agencies were established in April 1999. They brought together a number of economic development structures that had been operating at sub–national level [1] and several different funding streams, mostly focused on regeneration. RDAs were assigned the following statutory purposes [2] :

· to further the economic development and the regeneration of [their] area,

· to promote business efficiency, investment & competitiveness in [their] area,

· to promote employment in [their] area,

· to enhance the development and application of skills relevant to employment in [their] area, and

· to contribute to the achievement of sustainable development in the United Kingdom where it is relevant to [their] area to do so.

A regional development agency’s purposes apply as much in relation to the rural parts of its area as in relation to the non – rural parts of its area.

7. RDAs’ founding legislation required RDAs to prepare and keep under review a strategy relevant to their purposes. These Regional Economic Strategies were developed with the involvement of a wide range of regional partners; [3] they set economic development goals and priorities, and provided an implementation framework showing how different partner bodies would contribute to achieving the goals, within a national policy framework. Supported by a comprehensive evidence base, the strategies underpinned RDAs’ ability to take a long view of regional economic issues.

8. From 2002 onwards, the advent of the Single Programme concept allowed RDAs to merge departmental funding streams to target spend on identified regional priorities. This flexibility enabled RDAs to unlock opportunities and address issues in an integrated manner, in a way that other bodies with more specific remits are not always able to do [4] . Typically, RDAs’ budgets accounted for on average 0.7% of public expenditure in their regions. [5]

9. As NDPBs, RDAs have been directly accountable to central Government through BIS, with Chief Executives, as Accounting Officers, answerable to Parliament. RDA board members are appointed by the Secretary of State. A majority have business backgrounds, but every board also includes four appointees from local authorities as well as members from the trades unions, the third sector and, usually, education. The focus and perspective of RDAs has nevertheless been from a business orientation.

10. For the period 20010/11, as part of a national RDA Performance Framework, we have been required to make six monthly reports to our sponsoring Department (BIS) reporting progress against the following 6 core outputs:

· Jobs created or safeguarded

· Businesses created

· Business supported

· People assisted in skills development

· Cross – Regional collaboration

· Carbon reduction

11. These replaced the previous "Tasking Framework" which required RDAs to demonstrate how they were supporting the delivery of a range of national PSA targets, including the Regional Economic Performance PSA. [6]

RDAs delivering regeneration

12. In one of the largest independent evaluations of its type, commissioned by BERR (now BIS), PriceWaterhouseCoopers found that between 2002/3 to 2006/7 each £ invested by RDAs directly benefited regional economies by £4.50 rising to £6.40 if future benefits were taken into account. The report also found that the RDAs had levered in £5.7 billon of private sector expenditure. [7]

13. The RDAs have spent approximately £3.6bn [8] on a range of interventions designed to promote regeneration through physical infrastructure, including through bringing land back into use, improving public realm and promoting tourism.

14. This demonstrates that there is considerable knowledge in the RDAs experience of regeneration which can help inform the future direction of regeneration policy.

15. RDAs have helped to deliver physical regeneration in their regions by:

· helping to identify strategic priorities for physical regeneration;

· helping places to identify their advantages in order to support the regeneration of local economies;

· building agreement with other public and private bodies to support priorities;

· funding and managing their own projects;

· partially funding projects in partnership with Local Authorities or other public agencies;

· working with private sector partners through agreements or, more formally, through joint ventures;

· funding other delivery organisations; and

· providing capacity, expertise or advice to others.

Key lessons RDAs would wish to highlight are:

The need for a long–term vision shared across the public and private sectors

16. In delivering substantial benefits for communities through economic development and regeneration, it is critical that an evidence–led long–term vision is established. This requires a cross–sector and in many instances, cross–boundary consensus on these priorities. It is vital that the right conditions exist to attract private investment and mitigate any potential risks preventing this investment.

17. Equally important is for the partnership to recognise the long–term nature of realising maximum benefit from schemes and from investment. A study of factors that influence deprivation [9] found that effective regeneration requires a long–term, adequately resourced approach to ensure continuity of action, avoiding wasting of resources through continually establishing, delivering and ending short–term interventions. This helps in providing certainty to communities, thereby presenting an opportunity to develop their involvement.

The need for strong partnerships

18. Therefore, tackling deep seated structural and social problems requires a joined–up, multi–disciplinary approach to regeneration which brings together a range of partners locally to deliver improved inward investment, enterprise and innovation support to drive productivity and improve demand for jobs, whilst also tackling the issues of labour quality and supply. To truly and effectively tackle worklessness, experience has also demonstrated that this joined–up approach ensures people are connected to employment opportunities in adjacent economic areas through transport and ICT. It is vital that this type of approach drawing in partners continues in the new and emerging sub–national landscape.

19. Successful examples of RDAs delivering regeneration through bringing together partnerships designed to change communities for the better over the long–term:

· The EEDA–led partnership across the public and private sector, drawing in Ipswich Borough Council and Wharfside Regeneration (Ipswich) has stimulated the wider regeneration of Ipswich Waterfront. This has provided accommodation for businesses, homes and leisure facilities as well as campus developments for the Universities of East Anglia and Essex in addition to upgrades to the transport network, delivering a link between the town centre and Waterfront.

· Through the remediation of Shirebrook, emda brought together a wide partnership including Bolsover District Council, The Coalfield Regeneration Trust (CRT), and the Homes and Communities Agency to ensure that the employment opportunities generated would directly benefit the local workforce. Working with CRT, emda developed a series of exemplar programmes to develop local training opportunities and thus improve access to employment opportunities for local people by augmenting the support offered through mainstream job centre plus provision. This is noted as a national exemplar where work with the Coalfield Regeneration Trust (CRT) led to the Family Access to Employment initiative, which is now being rolled out at a national level by the CRT.

· Following the closure of the Rover site at the Longbridge Works in Birmingham, Advantage West Midlands led a task force to respond to the immediate aftermath of closure. The Agency also worked in partnership across the public and private sector to redevelop the site, working to shape and agree the Longbridge Area Action Plan (LAAP). This sets out a fifteen year vision to transform the former car plant and surrounding area into an exemplar, employment led, sustainable mixed use development.

The need for collaboration across the public and private sector

20. In these partnerships it is essential to secure early private sector buy–in to ensure that public intervention will maximise both the employment potential and private sector leverage. Up–front public sector investment in matters such as site assembly, infrastructure and local capacity has often been necessary for schemes to secure investment and value further down the line. Given the current state of the property market this is likely to continue to be a quandary for Government and localities to contemplate, albeit within the confines of even tighter levels of available funding. To be able to deliver this requires a strong degree of knowledge and expertise in understanding the needs of the business community.

21. This highlights the critical need in approaching major regeneration projects to have strong links with the private sector, understanding the realities of current and emerging business opportunities, the strengths, weaknesses, opportunities and threats of businesses, supply chains and sectors. It is also vital to engage directly with business leaders in delivering successful regeneration projects that maximise private sector investment and economic return. RDAs have proved successful in achieving this business–focused outlook.

The role for the public sector in providing a basis for private sector investment

22. The need for initial public sector expenditure has been and remains acutely the case in areas where either market failure or significant opportunity exists, but the private sector cannot or will not act alone. In particular, these conditions are often found in those areas requiring the most support and in greatest need of the benefits investment can bring.

23. From the experiences of the RDAs these conditions are usually one (or a combination) of the following:

a) Positive externalities: the benefits of the investment cannot be captured to generate a return on the investment, in a classic market failure. Support for R&D, innovation and technology demonstration facilities is an example of this, where the benefit from that investment cannot be captured by one body. A further example is the spill–over benefits of a visitor attraction, which may accrue to local hotels, retail businesses and more widely via improved profile. In such cases, RDAs would typically invest alongside other public partners, ensuring that the wider economic benefits were realised.

b) Disproportionate costs, for example in reclaiming brownfield land or provision of smaller business accommodation in rural areas that cannot be recouped from the end use of the investment, or would take too long to recoup. In such cases, RDAs would intervene at the minimum level necessary to attract private sector investment, whether by covering abnormal costs, or providing ‘gap funding’.

c) High levels of risk and uncertainty, for example in providing business accommodation in a location or for a particular sector where there is uncertain demand. In these situations, businesses may not have all of the information available to RDAs on current and likely future performance and the prospects of making a sufficient return to repay interest and capital, particularly where RDAs are playing a catalytic role in planned policy and technical developments, or wider regeneration plans. In such situations, RDAs typically co–invest with private sector bodies, taking a share of the risk and a share of eventual returns.

24. Through adopting this approach RDAs have demonstrated their ability to successfully lever in private sector funding to deliver effective and long–lasting regeneration in areas that may otherwise have missed out:

· The Ancoats Regeneration Programme in Manchester, led by the North West Development Agency, which is aiming to create a sustainable mixed–use community in which people can live, work and play is on target to lever in around £330m of private sector investment on a return of £69m invested by the RDA.

· At the Steetley Colliery site, emda managed to secure and nurture interest from Laing O’Rourke. This resulted in leverage of £57 million of private sector investment and the creation of new 270 jobs.

· Through the Strategy for Success, investment by One North East in innovation assets such as NaREC and CPI are providing real opportunities in the emerging offshore, marine and green chemical industries. The New and Renewable Energy Centre (NaREC) was established in Blyth by the Agency in 2002 as a public/private industry facing energy technology centre with a global customer reach but an objective to drive economic benefit from these technologies to the UK and North East. Over £30m of capital investment has been invested by One North East in NaREC since and to date NaREC has helped to create or safeguard over 330 jobs in the North East and assisted over 550 businesses. Their support has also been vital in securing key investments in the UK, such as Clipper Windpower, and they have contributed to levering over £21m into the region. This development has led to local office development as well as considerable investment in housing in Blyth, which would not have been the case without the initial investment in NaREC. Evaluation has demonstrated the value of adopting a long – term vision in approach and investment to delivering these tangible benefits which will continue to grow [10] .

· Investment of £9m from Yorkshire Forward in the Scarborough Urban Renaissance project alongside £6.5m ERDF funding and £7m from the local authority have successfully levered in £200m private sector investment in the town.

· At Shirebrook, emda were able to attract Sports Direct to the site to establish their new central headquarters on Brook Park. This development alone is predicted to bring forward more than 1,800 new jobs and involves an investment from Sports Direct of over £80m.

· A total investment of £17.7m from the South West Development Agency has yielded investment of nearly £40m from the private sector, which has led to huge improvements in the Gloucester Docks area, raising the economic and social environment in an area with economic social and physical problems.

25. RDAs have sought innovative methods of attracting both expertise and investment from the private sector to enhance delivery of regeneration. These types of approaches continue to be invaluable given the unstable property market at the current time and its impact on the resolve of the private sector to invest.

· One North East established a public private partnership, Buildings for Business with UK Land Estates to manage the Agency’s portfolio of industrial property (some 1,700 across 49 business estates), utilising private sector expertise to drive regeneration and enable re–investment in the portfolio for refurbishment and redevelopment. The project has already produced income for the Agency of £90m which has been reinvested to improve the range and availability of business premises across the region, addressing a market failure.

· The ‘blueprint’ limited partnership was established by emda in May 2005 to kick–start development in the region by leveraging in private sector funding and expertise. Investment, ownership, risk and profit are shared equally between the public and private sector. blueprint’s principle focus is on projects where the mainstream developer market might struggle to deliver the outcomes desired and/or the right regeneration solution might not coincide with a purely market–driven approach, such as delivering innovative and sustainable design.

· The £100m Northwest Urban Investment Fund, an ERDF – funded JESSICA initiative, is a lasting legacy from the NWDA, potentially delivering millions of pounds of investment through a recycled fund that will also move government assistance away from grants towards a repayable investment that can fund future projects.

· Advantage West Midlands brought public sector partners together in 2008, to agree on priorities for regeneration investment. A total of 20 Impact Investment Locations were identified. Their selection reflected the inter–relationships in securing co–ordinated public sector investment from a diverse range of sources including the Homes and Communities Agency, the Department for Transport, AWM and local government, plus leveraging in private sector investment. It is estimated that total current public sector commitments of £1,880m have helped to secure an additional £1,113m of private sector investment. Local Enterprise Partnerships in the region are taking forward the same priorities as part of their approach.

The need for leadership

26. Regeneration sites (as well as their impacts) often cross administrative boundaries. RDAs have worked strategically to lead and establish a partnership of local and central government together with the private sector and the local community to deliver a truly multi–agency solution. RDAs, the Homes and Communities Agency and Local Authorities, with various partners, have worked together to; improve economic performance and tackle worklessness, create the right conditions for business growth, create sustainable places where people want to live and can work and where businesses want to invest.

27. Given the potential impact of major investments that can often cross over administrative boundaries, it is important to note that tough choices are often needed to be taken in delivering successful regeneration schemes and in an era where resources are even scarcer, it is essential that investment decisions are based on achieving the greatest economic impact. The importance therefore, of a robust evidence base for prioritising investment cannot be under–estimated. Investment decisions need to be taken based on the best available evidence on economic conditions, technological developments, property markets and many other areas that will influence private sector investment. In order for this to take effect across political boundaries however, strong leadership and partnership working is vital.

Strong community engagement

28. This response has highlighted that RDAs have demonstrated the benefits of combining economic development and regeneration, including tackling worklessness to secure better outcomes for people living in deprived areas and promoting opportunity in these locations. A key strand of this that should continue to be encouraged is through close community interaction. In particular, RDAs have found that close working relationships with partners such as Urban Regeneration Companies, local authorities and the third sector, particularly in areas of severe deprivation has been important in enabling local communities and local knowledge to influence and achieve transformational change.

· emda’s independent evaluation noted that a particular factor of success (particularly in delivery of Sherwood Energy Village and Avenue Coking Works) was the community–led approach taken whereby extensive systems of customer and stakeholder engagement were established at early stages of each project [11] .

· Scarborough’s Urban Renaissance, led by Yorkshire Forward has been recognised regionally as leading the way in public participation and has led to the development of an enterprising culture within the town through the establishment of several enterprise networks [12] , highlighting how it has raised local people’s aspirations and sense of pride.

· The North West Development Agency’s £20m investment in bringing together a partnership to capitalise on the coastal and waterfront assets of the whole of Merseyside led to a creation of a £91m environmental and economic development programme to harness the assets in a coordinated way. This includes universal support from the six local authorities and incorporates ‘People’s Panels’, putting local people at the heart of the programme enabling them to critique and challenge project ideas.

Conclusions

29. This response has set out the key features from past and present regeneration schemes that England’s RDAs feel need to be taken forward in the new approach of the Government.

30. In summary, the lessons RDAs have highlighted in this response are:

· The need for a long–term vision of regeneration;

· The need for the public and private sector to work collaboratively in achieving that vision;

· The need for strong partnerships to exist;

· The role for the public sector in providing the basis for private sector investment;

· The need for leadership;

· The need for effective community engagement.

31. From the outset, it is vitally important to recognise that regeneration is a process that can deliver significant benefits, but the evidence cited earlier from the PwC Report highlights that the maximum benefit comes in the long–term. The lower level of resources available through the Regional Growth Fund makes it even more critical that long–term factors are given strong consideration in how regeneration is taken forward.

32. This lower level of resources makes it more critical that the public and private sector work collaboratively to achieve this vision, both understanding each others roles and qualities and cementing a strong partnership over the long–term to deliver the shared vision. If managed effectively, collaboration can exist between Local Enterprise Partnerships which has the potential to secure future investment in regions:

· through attracting investment by national and global businesses;

· supporting the ability of regional businesses to grow and therefore reinvest in their place and their people;

· and attracting public investment from Regional Growth Fund, ERDF and other EU funding;

· and government programmes in, for example, science and the low carbon economy.

33. In some areas that are most in need of regeneration however, the public sector may need to be prepared to take pro-active steps to provide the basis for private sector investment. Private sector investment is driven by market forces and sometimes support is required that the public sector can still provide. Examples in this submission have highlighted how this type of leadership can result in profound changes to lives in communities through engaging with and inspiring communities to become part of this change.

34. Equally important will be collaboration by LEPs to work with national bodies delivering functions around innovation, foreign direct investment and sectoral development. Furthermore, joint working to address key infrastructure requirements-roads, rail, energy, water, waste, broadband-which cross local boundaries will be essential to provide a top quality environment for securing investment by private companies and others in the regions across England. Proper, open, strategic collaboration will be essential to provide the right spatial footprint to attract and influence the large-scale investment necessary for regional economies to continue to grow and prosper.

35. RDAs feel it is essential to understand the integrated nature of regeneration and economic growth, where the outcome can only be achieved with good communication and joint planning between the functions of skills, sites and premises development, transport planning, environmental protection, enterprise support, and many other aspects. It is in delivering this integrated, multi-expert approach to economic development that the true benefits of regeneration schemes are achieved.

March 2011